For entrepreneurs, the thought of expanding a business is certainly an exciting prospect. Expansion means more products or services, sales, and income for your business. For businesses with a physical location, an expansion could mean a bigger venue or a second location.
But before you dive head first into expanding your business, it’s very important to make sure your company will be able to handle the growth. Here are a few ways to tell if your business is ready for expansion:
An established customer base
Your business should already have a regular, and ideally growing number of loyal customers. Having a stable flow of customers indicates that there is an ongoing demand for your product or service.
The best type of customers to have are repeat customers. Having repeat customers proves that customers are happy and satisfied with your offerings. Additionally, your business becomes more stable due to the recurring revenue
from repeat customers.
Your customers want your business to grow
Having customers inquiring about more products/services and looking forward to the growth of your business is a good indication that it’s time to expand.
It means you need to start thinking about how to meet customers’ demands. Growing your business is a step towards satisfying existing and additional customers, which will increase your income and hopefully help you earn back the money you used to invest in expansion. If you have a physical location, it may be a smart idea to consider setting up a new location to serve regular customers from far away and establish a new customer base in a different area.
You have reliable and experienced employees
For your business to expand successfully, you need to have a staff that is ready for new demands and challenges. They need to be fully capable of handling new tasks and responsibilities, like managing a new location, account, or product line. If you think your staff is up to the challenge, there is good chance that you’ll end up with a successful business expansion.
Your profits are stable
A recent increase in your profits might not necessarily be a good indicator that it’s time for you to expand, as it could only be a seasonal or short-term surge. What you’re looking for is long-term success and steady profitability.
If you do have consistent income, what you can do is invest a portion of your profits into improving your business. As it expands, there’s a good possibility that your net income will increase as well.
Your business is experiencing new challenges
You might reach a certain point when you’re already getting more business than you’re capable of handling. Additional staff or more space might be the perfect solution.
An expansion can help your business meet additional demands and gain more customers. Having difficulty with handling more business is a good sign – think of it as “growing pains” for your business. It might be time for a larger space or a second location so you can serve more customers.